Amazon’s venture into profiting from its Alexa-enabled devices has not yielded positive results, with reports indicating that the company has incurred losses exceeding $25 billion between 2017 and 2021 from its Echo, Kindle, and other devices. According to the Wall Street Journal, internal documents and sources familiar with the situation revealed that despite accumulating hundreds of millions of users for these devices, Alexa-enabled Echo speakers are primarily used for basic functions like setting alarms rather than shopping on Amazon.
A former senior employee expressed concerns, saying, “We worried we’ve hired 10,000 people and we’ve built a smart timer.” In response to the financial setbacks, Amazon CEO Andy Jassy is reportedly exploring solutions, including the introduction of a paid version of its voice assistant. However, some engineers at Amazon are skeptical about the potential impact of a paid Alexa.
An Amazon spokesperson commented that the company is concentrating on the value delivered to customers through its services, not solely through device sales. They claimed that the Devices & Services organization has successfully established several profitable ventures for Amazon and is well-positioned for future success.
In addition, reports suggest that Amazon’s new AI-powered Alexa, unveiled in September, is far from ready for deployment. Former employees indicated that the company lacks sufficient data and access to the necessary chips to support the large language model driving the new iteration of its virtual assistant. Furthermore, Amazon is said to have shifted its focus from enhancing Alexa to developing generative AI for its cloud computing sector, Amazon Web Services.
In response to the criticism from former employees, Amazon stated that these individuals were misinformed about the company’s current AI initiatives and asserted that the Amazon Artificial General Intelligence team has access to essential in-house Trainium chips and Nvidia GPUs. Amazon reiterated that its goal for Alexa remains consistent—”to build the world’s best personal assistant.”